Day of decision for the tech giants

Just how will the two IT juggernauts, which have a combined value of around $2.7 trillion, react to what is literally world-first legislation of potentially huge significance? Will, for example, Facebook pick up its bat and ball and go home by blocking Australian news content? That, after all, is what it threatened to do when the Australian Competition and Consumer Commission released its draft bargaining code in July? And what about Google? Will it "dumb down" its services by excluding local news content from search results?

One would hope not given since those threats were initially made the federal government has addressed the major concerns Google and Facebook had raised about the proposed code.

The most significant concession is the requirement that, in the event an attempt by one of the digital platforms and a media company to negotiate an agreement fails, and is then referred to mandatory arbitration, the arbitrator is required to consider the so-called "two-way" value exchanges between the parties. That is premised on the claim by the digital platforms that the media companies benefit from the "eyeballs on the page" delivered by Facebook Newsfeed and Google.

NewsCorp Australasia executive chairman Michael Miller touched on this point when he said: "I daresay we have differing views of that value. They do push traffic to our sites, but it is our content which drives people to their sites". Or, in other words, which came first? The chicken or the egg?

A key point for Google and Facebook to consider is that arbitrated agreements are clearly outcomes of last resort under the code. Arbitration is only invoked if a news company and a digital platform are unable to reach a mutually satisfactory and equitable position by negotiating in good faith.

An indication of the current relative positions of the media firms and the IT giants is that for every $100 of online advertising spent in Australia $53 goes to Google, $28 to Facebook, and only $19 to the news platforms that actually generate the shared content.

This trend, which has accelerated over the last decade, is ultimately not sustainable. The tech giants have become massively wealthy and powerful off the back of the work of others. And, perhaps ironically, unless corrective measures such as the code are applied, Google and Facebook risk becoming victims of their own success.

If the long established, credible and trusted news generators are finally pushed under the bus, where will the digital platforms get their content - and their searches, likes and shares - from?

And, in the event Google, Facebook and the other companies that may eventually come to be covered under the code, care to look at the bigger picture, they might want to ask themselves what value they place on a democratic, free-enterprise orientated, and politically stable social environment which has a strong consumer culture. This, after all, is what allowed them to emerge and to evolve. Every whale needs an ocean in which to swim.

Media companies such as Australian Community Media, the publisher of The Canberra Times, play an important role in keeping that democratic and libertarian tradition alive.

Facebook's and Google's own commitment, or lack thereof, to this type of society will soon be demonstrated by the way they react to the media bargaining code.

They will no doubt be well aware the world is watching with keen interest to see what happens next.